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The 2015 inflation-adjusted amounts for various penalties imposed for failure to file information returns were issued by the IRS on Thursday (Rev. Proc. 2016-11). In most cases, the penalties remain at their statutory amounts because of low inflation. Rev. Proc. 2016-11 also corrects a penalty provision in Section 3.48(3) of Rev. Proc. 2015-53.

The 2016 inflation adjustments for these penalties were already released in Rev. Proc. 2015-53 (see prior coverage here). Information return failure-to-file penalties are now inflation-adjusted as a result of the enactment of the Tax Increase Prevention Act of 2014, P.L. 113-295.

For example, beginning for tax year 2015, the Sec. 6651(a) penalty for failure to file a tax return within 60 days of the due date of the return (with regard to any extensions) is not less than the lesser of $135 or 100% of the amount of tax required to be shown on the return. The $135 statutory amount did not increase because inflation was too low to trigger an increase.

Other amounts that are unchanged include the penalties for failing to file partnership returns or S corporation returns, which remain at $195 per partner or shareholder.

Two amounts that did increase are the penalty assessed under Sec. 6695(f) on tax return preparers who negotiate a client’s check and the penalty under Sec. 6695(g) for failure to be diligent in determining eligibility for the earned income tax credit. For 2015, both penalties are $505, a slight increase from the statutory amount of $500, but the maximum penalties that can be imposed on return preparers under Secs. 6695(a) through (e) are unchanged for 2015 at $25,000.

State audits of abandoned and unclaimed property (AUP) have exploded in recent years. This report outlines the escheat process, common types of AUP, how different states are handling it and how companies can plan for potential audits and liabilities.

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